Purpose: Eliminate double taxation of income

Beneficiaries: Foreign-invested enterprises and individuals

Conditions: Foreign resident enterprises and individuals subject to taxation in China

Details: Income earned by Italian residents, taxable in China under this Agreement, may also be considered for taxation in Italy based on applicable Italian law. In such cases, Italy should allow a deduction for the tax amount paid in China from the tax calculated using the mentioned method, up to the proportion of the income in the total income, without exceeding the tax payable in Italy.

Released by: Government of the People's Republic of China and Government of the Italian Republic

Basis: Agreement of the Government of the People's Republic of China and the Government of the Italian Republic on Elimination of Double Taxation and Prevention of Tax Avoidance

Validity: Currently in effect

Purpose: Promote reinvestment by foreign investors

Beneficiaries: Foreign-invested enterprises

Conditions: Foreign investors reinvesting directly using distributed profits

Details: The withholding income tax on distributed profits from domestic resident enterprises to foreign investors, used for direct reinvestment, will be temporarily exempted.

Released by: Ministry of Finance, State Administration of Taxation, National Development and Reform Commission, Ministry of Commerce

Basis: Notice on Expanding the Scope of Applicationof Temporarily Non-levied Withholding Income Tax Policies for Foreign Investors' Distributed Profits Used for Direct Investment (Caishui [2018] No.102)

Validity: Currently in effect

Purpose: Supporting the growth of high-tech enterprises

Beneficiaries: High-tech enterprises

Conditions: Enterprises recognized as high-tech according to the Notice of the Ministry of Science and Technology, the Ministry ofFinance, and the State Administration of Taxation on the Revision and Issuance of Measures for the Administration of High-tech Enterprise Certification (GuokeFahuo [2016] No. 32)

Details: High-tech enterprises that require necessary state support will be subject to a reduced corporate income tax rate of 15%.

Released by: National People's Congress

Basis: Enterprise Income Tax Law of the People's Republic of China

Validity: Currently in effect

Purpose: Promoting foreign investment in the high-tech, high-value-added service industry, fostering technological innovation, and enhancing technical service capabilities of enterprises

Beneficiaries: Technologically advanced service enterprises

Conditions:

Technologically advanced service enterprises must fulfill the following requirements simultaneously:

(1) Registered legal entities in China (excluding Hong Kong, Macau, and Taiwan)

(2) Engaged in one or more technologically advanced service businesses listed in the Scope of Confirmation for Technologically Advanced Service Enterprises (Trial Implementation), utilizing advanced technology or possessing strong R&D capabilities

(3) More than 50% of employees hold college degrees or higher

(4) Revenue from technologically advanced service businesses listed in the Scope of Confirmation for Technologically Advanced Service Enterprises (Trial Implementation) accounts for over 50% of the enterprise's total income for the year

(5) Revenue from offshore service outsourcing constitutes no less than 35% of the enterprise's total income for the year

Details:

(1) Identified technologically advanced service enterprises are subject to a reduced corporate income tax rate of 15%.

(2) Expenses related to employee education within 8% of the total salary amount can be deducted when calculating the payable income tax. Any excess amount can be carried forward and deducted in subsequent tax years.

Released by: Ministry of Finance, State Administration of Taxation, Ministry of Commerce, Ministry of Science and Technology, National Development and Reform Commission

Basis: Notice on Nationwide Promotion of Income Tax Policies for Technologically Advanced Service Enterprises (Caishui [2017] NO.79)

Validity: Currently in effect

Purpose: To provide support for the growth of high-tech enterprises and technological SMEs

Beneficiaries: High-tech enterprises and technological SMEs

Conditions:

(1) High-tech enterprises are defined as enterprises meeting the requirements outlined in the Notice of the Ministry of Science andTechnology, Ministry of Finance, and State Administration of Taxation regarding the Revision and Issuance of Administrative Measures for the Confirmation of New and High Technology Enterprises (Guokefahuo [2016] NO.32).

(2) Technological SMEs are enterprises obtaining a technological SME registration number based on the conditions specified in the Notice of the Ministry of Science and Technology, Ministry of Finance, and State Administration of Taxation on Printing and Distributing Administrative Measures for the Evaluation of Technological Small and Medium Enterprises (Guokefahuo [2017] NO.115).

Details: Starting from January 1, 2018, eligible high-tech enterprises and technological SMEs can carry forward and offset losses incurred within five years prior to obtaining their qualification. The maximum carry-forward period is extended from 5 to 10 years.

Released by: Ministry of Finance, State Administration of Taxation

Basis: Notice on the Extension of Loss Carry-forward Period for High-tech Enterprises and Small and Medium-sized Technological Enterprises (Caishui [2018] No. 76)

Validity: Currently in effect

Purpose: To incentivize scientific research, technological development, and scientific progress

Beneficiaries: Foreign investment R&D Centers

Conditions: The following conditions must be simultaneously met:

(1) R&D expenditure standard: The total investment of the enterprise as an independent legal entity should be no less than 8 million US dollars, and the R&D investment of the enterprise's internal department or branch should be no less than 8 million US dollars.

(2) Full-time research and experimental development personnel should be no less than 150.

(3) The cumulative original value of equipment since establishment should be no less than 20 million yuan.

Details: Full refund of value-added tax on the purchase of domestic manufactured equipment by foreign investment R&D centers.

Released by: Ministry of Finance, General Administration of Customs, State Administration of Taxation

Basis: Announcement on the Continuation of Value-added Tax Policies for the Purchase of Equipment by Research and Development Institutions (Announcement No. 91 [2019] of the Ministry of Finance, Ministry of Commerce, and State Taxation Administration)

Validity: Until December 31, 2023

Purpose: To promote the growth of the environmental protection industry

Beneficiaries: Domestic and foreign-invested enterprises

Conditions: The equipment purchased by enterprises must be listed in the Catalogue of Enterprise Income Tax Preferences for Specific Environmental Protection Equipment, the Catalogue of Enterprise Income Tax Preferences for Specific Energy and Water Conservation Equipment, or the Catalogue of Enterprise Income Tax Preferences for Specific Safety Production Equipment.

Details: Enterprises that purchase and utilize designated state-approved environmental protection, energy and water conservation, and safety production equipment are eligible for a 10% deduction of their equipment investment amount from the enterprise income tax payable.

Released by: Ministry of Finance

Basis: Notice of the State Administration of Taxation on the Implementation of the Catalogue of Enterprise Income Tax Preferences for Specific Environmental Protection Equipment, the Catalogue of Enterprise Income Tax Preferences for Specific Energy and Water Conservation Equipment, and the Catalogue of Enterprise Income Tax Preferences for Specific Safety Production Equipment (Caishui 2008 NO.48).

Validity: Currently in effect

Purpose: Reduce enterprise tax burden

Beneficiaries: Domestic and foreign-invested enterprises

Conditions: Energy-saving service enterprises implementing benefit-sharing and contract energy management projects, following auditing and meeting specified requirements

Details: Exemption from corporate income tax for the first three years and 50% reduction at the statutory rate of 25% for the fourth to sixth years, starting from the tax year when the project generates initial income

Released by: State Administration of Taxation, National Development and Reform Commission, Ministry of Finance

Basis: Notice on Promoting Energy-saving Service Industry Development and Related Tax Policies (Cai Shui [2010] No. 110)

Validity: Currently in effect

Purpose: To alleviate the tax burden on enterprises

Beneficiaries: Domestic and foreign enterprises

Conditions: Enterprises in the production andservice industries

Details: Tax payers in the production and service industries can deduct 10% of their current deductible input tax from the tax payable.

Released by: Ministry of Finance, State Administration of Taxation, General Administration of Customs

Basis: Announcement on Further Enhancing Policies of Value-Added Tax Reform (Ministry of Finance, State Administration of Taxation, and General Administration of Customs Announcement No. 39, 2019)

Validity: Until December 31, 2021

Purpose: Encourage increased R&D investment by enterprises and support technological innovation.

Beneficiaries: Enterprises other than manufacturing, excluding tobacco manufacturing, accommodation and catering, wholesale and retail, real estate, leasing and business services, and entertainment.

Conditions: Enterprises with actual R&D expenses incurred in R&D activities.

Details: For actual R&D expenses incurred by enterprises in R&D activities that have not formed intangible assets and are not included in the current period's income and expenses, before December 31, 2023, in addition to the deduction according to regulations, an additional 75% deduction will be made before tax based on the actual amount incurred; for those forming intangible assets, during the mentioned period, an upfront amortization of 175% of the intangible asset cost will be applied before tax.

Released by: Ministry of Finance, State Administration of Taxation, Ministry of Science and Technology.

Basis: 'Notice of the Ministry of Finance, State Administration of Taxation, Ministry of Science and Technology on Increasing the Proportion of Pre-tax Additional Deduction of Research and Development Expenses' (CaiShui [2018] No. 99), 'Announcement of the Ministry of Finance, State Administration of Taxation on Extending the Implementation Period of Some Tax Preferential Policies' (Ministry of Finance, State Administration of Taxation Announcement No. 6 of 2021).

Validity: Until December 31, 2023.

Purpose: Incentivize enterprises to increase investment in R&D and support scientific and technological innovation

Beneficiaries:

Except for tobacco manufacturing, accommodation and catering, wholesale and retail, real estate, leasing and business services, entertainment, etc., enterprises in other industries can enjoy

Conditions: Enterprises that carry out R&D activities in which the actual R&D costs are incurred

Details: The actual R&D expenses incurred by enterprises in carrying out R&D activities, which do not form intangible assets and are included in the current profit and loss, shall be deducted on the basis of the actual deduction, and from January 1, 2023, 100% of the actual amount incurred shall be deducted before tax; if intangible assets are formed, from January 1, 2023, 200% of the cost of intangible assets shall be amortized before tax.

Released by: Ministry of Finance, General Administration of Taxation, Ministry of Science and Technology

Basis:

Announcement of the Ministry of Finance, the State Administration of Taxation on Further Improving the Policy on Pre-tax Deduction of R&D Expenses (No. 7 of 2023)

Notice of the Ministry of Finance, State Administration of Taxation and Ministry of Science and Technology on Improving the Policy on Pre-tax Deduction of Research and Development Expenses (Cai Shui [2015] No. 119)

Announcement of the State Administration of Taxation on Issues Relating to the Scope of Pre-tax Add-on Deduction for Research and Development Expenses (No. 40 of 2017)

Circular of the Ministry of Finance, the General Administration of Taxation and the Ministry of Science and Technology on Issues Relating to the Policy on Pre-tax Deduction of Research and Development Expenses Entrusted by Enterprises Outside of China (Cai Shui [2018] No. 64)

Validity: Currently in effect

Purpose: To provide further support for the development of small and micro-profit enterprises.

Beneficiaries: Small and micro-profit enterprises (Enterprises operating in industries not restricted or prohibited by the State, meeting three conditions: annual taxable income not exceeding RMB 3 million, workforce not exceeding 300, and total assets not exceeding RMB 50 million).

Conditions: From January 1, 2021 to December 31,2022, the annual taxable income of small and micro-profit enterprises should not exceed RMB 1 million.

Details: From January 1, 2021, to December 31, 2022, the portion of annual taxable income not exceeding RMB 1 million for small and micro-profit enterprises will be subject to a 12.5% reduction in taxable incomeand will be taxed at a corporate income tax rate of 20%.

Released by: Ministry of Finance, State Administration of Taxation

Basis: Announcement by the State Administration of Taxation on the Implementation of Preferential Income Tax Policies to Support the Development of Small and Micro Profit Enterprises and Individual Entrepreneurs (State Administration of Taxation Announcement No. 8 of 2021)

Validity: Until December 31, 2023.

Purpose: To support the high-quality development of small and micro-profit enterprises andmanufacturing enterprises.

Beneficiaries: Tax payers of small and micro-profit enterprises and manufacturing enterprises.

Conditions: The following conditions must be met:

(1) A or B tax credit rating

(2) No history off raudulent retention of tax refunds, export refunds, or fraudulent issuance ofspecial VAT invoices within the previous 36 months before applying for a tax refund.

(3) No more than two instances of tax evasion penalties imposed by tax authorities within the previous 36 months before applying for a tax refund.

(4) Excluded from the levy-and-refund or levy-before-refund policy since April 1, 2019.

Details:

(1) The policy of full monthly refund of incremental VAT retention tax credit, initially applicable to advanced manufacturing industries, has been extended to eligible small and micro-profit enterprises. A one-time refund of retained tax credits for the stock of small and micro-profit enterprises will be provided.

(2) The policy of full monthly refund of incremental VAT retention tax credit, initially applicable to advanced manufacturing industries, has been extended to eligible enterprises in manufacturing and other industries. A one-time refund of retained tax credits for the stock of enterprises in manufacturing and other industries will be provided.

Released by: Ministry of Finance, State Administration of Taxation

Basis: Announcement by the Ministry of Finance andthe State Administration of Taxation to further enhance the implementation of the policy on retained tax refund at the VAT closing period (Ministry of Finance and the State Administration of Taxation Announcement No. 14 of 2021)

Validity: Until December 31, 2023.

Purpose: To incentivize enterprises to increase investment in equipment and instruments.

Beneficiaries: Domestic and foreign-invested enterprises.

Conditions: This applies to enterprises that have newly purchased equipment and instruments between January 1, 2018, and December 31, 2023.

Details: Equipment and instruments with a unit value not exceeding RMB 5 million can be included in the costs and expenses of the current period. They are deductible when calculating the enterprise's taxable income and are not required to be depreciated over the years.

Released by: Ministry of Finance, State Administration of Taxation.

Basis: Notice of the Ministry of Finance and State Administration of Taxation on Corporate Income Tax Policy Regarding Deduction of Equipment and Instruments (Cai Shui [2018] No. 54), Announcement of the Ministry of Finance and State Administration of Taxation on Extending the Implementation of Some Preferential Tax Policies (Ministry of Finance and State Administration of Taxation Announcement [2021] No. 6).

Validity: Valid until December 31, 2023.

Purpose: To alleviate the tax burden on foreign investors.

Beneficiaries: Foreign-invested enterprises.

Conditions: Applies to foreign-invested projects listed in the Catalogue of Encouraged Industries for Foreign Investment (2020 edition).

Details: Customs duties will be waived for self-use equipment imported as part of the totalinvestment, including related accessories and spare parts as stipulated in thecontract. Exceptions apply for items listed in the Catalogue of Non-Exempted Imported Commodities for Foreign Investment Projects and the Catalogue ofImported Major Technical Equipment and Products not eligible for tax exemption.

Released by: TheState Council, General Administration of Customs.

Basis: Announcement of the State Council on Adjustingthe Tax Policy of Imported Equipment (Guofa [2018] NO.37), General Administration of Customs Announcement [2008] No. 103, and General Administration of Customs Announcement [2019] No. 125.

Validity: Currently in effect.

Purpose: To promote the growth of processing trade and alleviate operational burdens on enterprises.

Beneficiaries: Foreign-invested enterprises.

Conditions: Foreign-invested enterprises engaged in processing trade. Processing trade refers to business activities where companies import raw materials, supplementary materials, parts, components, and packaging materials (collectively referred to as materials), and the finished products are exported after processing or assembly. This includes processing with supplied materials and processing with imported materials.

Details: Imported materials and parts used in processing trade are placed under bonded supervision. The customs will cancel the bond upon the exportation of the processed products based on the actual quantity processed and re-exported. Any customs duties paid on the imported materials will be refunded by the customs based on the actual quantity processed and re-exported. Processing trade encompasses both processing with supplied materials and processing with imported materials.

Released by: General Administration of Customs.

Basis: Measures of the People's Republic of China on the Supervision and Administration of Processing Trade Goods (Order of the General Administration of Customs No.219).

Valid through: Currently in effect.

Purpose: To reduce investment costs

Beneficiaries: Enterprises located in the bonded zone

Conditions:

(1) Enterprises must have legal personality.

(2) Business sites must be within the bonded zone.

Details: Customs duties or import-related taxes are exempted for goods, infrastructure materials, equipment, and office supplies that are imported into the bonded area.

Released by: General Administration of Customs.

Basis: Measures of the PRC Customs on Comprehensive Bonded Zones (GAC Order No. 256).

Valid through: Currently in effect.

Purpose: To facilitate the trade of goods.

Beneficiaries: Enterprises located in bonded areas

Conditions:

(1) Enterprises must have legal personality.

(2) Business sitesmust be within the bonded zone.

Details: Goods entering and leaving the bonded port area and overseas are exempted from importand export quota and license management.

Released by: General Administration of Customs

Basis: Measures of the PRC Customs on Comprehensive Bonded Zones (GAC Order No. 256)

Valid through: Currently in effect.

Purpose: To promote free trade

Beneficiaries: Enterprises located in bonded areas

Conditions:

(1) Enterprises must have legal personality.

(2) Business sites must be within the bonded area.

Details: The Customs implement a record-keeping system for goods entering and leaving the bonded port area and overseas. Goods are placed under bonded treatment upon entering the bonded port area from abroad.

Released by: General Administration of Customs

Basis: Measures of the PRC Customs on Comprehensive Bonded Zones (GAC Order No. 256)

Valid through: Currently in effect.